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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 13 years, the highest Beneish M-Score of Flextronics International Ltd was 1.16. The lowest was -6.74. And the median was -2.50.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Flextronics International Ltd for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 0.9762||+||0.528 * 0.9004||+||0.404 * 1.9763||+||0.892 * 0.9864||+||0.115 * 1.0483|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1824||+||4.679 * -0.0403||-||0.327 * 0.9877|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $2,058 Mil.|
Revenue was 5876.813 + 5772.698 + 6763.177 + 6316.762 = $24,729 Mil.
Gross Profit was 405.995 + 406.337 + 452.467 + 396.916 = $1,662 Mil.
Total Current Assets was $8,421 Mil.
Total Assets was $12,509 Mil.
Property, Plant and Equipment(Net PPE) was $2,296 Mil.
Depreciation, Depletion and Amortization(DDA) was $535 Mil.
Selling, General & Admin. Expense(SGA) was $985 Mil.
Total Current Liabilities was $6,628 Mil.
Long-Term Debt was $2,693 Mil.
Net Income was 105.729 + 61.344 + 148.91 + 122.977 = $439 Mil.
Non Operating Income was -3.529 + -1.481 + -44.415 + -45.748 = $-95 Mil.
Cash Flow from Operations was 263.932 + 196.673 + 277.777 + 299.719 = $1,038 Mil.
|Accounts Receivable was $2,137 Mil.
Revenue was 5566.248 + 5951.6 + 7025.054 + 6528.517 = $25,071 Mil.
Gross Profit was 352.341 + 378.817 + 408.657 + 377.081 = $1,517 Mil.
Total Current Assets was $9,080 Mil.
Total Assets was $12,100 Mil.
Property, Plant and Equipment(Net PPE) was $2,143 Mil.
Depreciation, Depletion and Amortization(DDA) was $529 Mil.
Selling, General & Admin. Expense(SGA) was $845 Mil.
Total Current Liabilities was $6,496 Mil.
Long-Term Debt was $2,632 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(2057.943 / 24729.45)||/||(2137.255 / 25071.419)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(1516.896 / 25071.419)||/||(1661.715 / 24729.45)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (8420.959 + 2296.445) / 12508.524)||/||(1 - (9080.227 + 2143.221) / 12100.18)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(529.108 / (529.108 + 2143.221))||/||(534.748 / (534.748 + 2296.445))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(985.051 / 24729.45)||/||(844.581 / 25071.419)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((2692.596 + 6627.703) / 12508.524)||/||((2632.138 + 6496.228) / 12100.18)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(438.96 - -95.173||-||1038.101)||/||12508.524|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Flextronics International Ltd has a M-score of -2.38 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Flextronics International Ltd Annual Data
Flextronics International Ltd Quarterly Data